Yen bulls are winners once again thanks to global risk aversion sentiment dominating on negative U.S. trade developments with China and Mexico.
Japanese Headlines and Economic data
- Japan services producer price index y/y rises 0.9% versus 1.1% in March
- Bank of Japan core CPI increases by 0.7% y/y versus a 0.5% read in the previous month
- China appears to make veiled threat about rare earth minerals crucial to US technology industry
- The US-China trade war could slash economic output across the world – fresh negative trade war developments and its affect on the global economy are starting to take center stage, prompting more risk aversion behavior (i.e., buying back safe haven assets like the yen).
- BOJ policymaker warns against ‘reckless’ easing to reach price goal
- BOJ will mull addressing demerits of easing if needed: Sakurai
- Japan’s April jobless rate falls to 2.4%
- Japan’s factory output rebounds, but retail sales slow as trade war risks grow
- Trump Says U.S. Will Hit Mexico With 5% Tariffs on All Goods – This surprise event from the U.S. sparked global risk aversion sentiment as it comes just a few hours after the U.S. administration submits its already agreed trade deal with Canada and Mexico to Congress for approval. Changing the terms on a whim is likely read by the global community that trade deals with the U.S. aren’t something to be relied upon, and this is arguably further de-motivation for China to lock up a deal with the U.S., hence the risk-off behavior and yen rally.